hin trading volumes throughout Asian electronic trading and the London session kept precious metals under pressure as the greenback bounced erratically between $1.3847 and $1.3975on Friday. However, a rally in US equity markets, possibly due to continued credit market thawing, eased investors' uncertainty. The resultant increase in investment fund flows filtered into precious metals, taking the metals higher during the New York session before a sudden reversal overnight as the greenback strengthened to $1.3850 again.
The rally during the New York session was also supported by higher crude oil prices (which we still believe reflects an inflated geopolitical risk premium). We note that WTI crudeoil gained from just above $42/bbl in early NY activity to just below $49/bbl in aftermarket electronic activity. Further oil price appreciation should anchor precious metal pricesin an environment of increased currency volatility.
On the economic data front, we note that both US and Eurozone December PMI manufacturing indices registered a contraction. US PMI manufacturing came in at 32.4 (forecast: 35), while the statistic for the Eurozone registered 33.9 (forecast: 34.5). Given that a PMI reading of less than 50 reflects a contraction, US and Eurozone industrial demand remains understrain - this should weigh on PGM in the short to medium term. The sentix Eurozone investor confidence index is due to be released later today - a worse-than-expected statistic could see the greenback claw even higher today. Important for PGM, lookout for US total vehicle sales tomorrow.
Gold slipped from $887 to $872 during Asian electronic activity, before shedding a further $7 in London. However, with oil prices picking up and the greenback losing some ground, gold then garnered fund-buying support - settling at $874 at the London PM fix. This continued in New York, with the metal gaining to $879 before consolidating at $878 at the close.Overnight, the metal plunged to $868. Primary support is at $863, with secondary support at $857 and $840. Resistance is at $880, $891 and $908.
Silver tracked gold throughout the day, finding major support in NY - managing to climb from $11.13 to $11.50, before consolidating at $11.48 at the close. Support and resistance are at $11.26 and $11.64, respectively, today.
Platinum bounced between $938 and $928 throughout London and Asia trading, before pushing higher in NY to $943 - settling at $938 at the NY close before plummeting to $930 overnight. Palladium traced platinum, dipping to $184 in London before $191 in NY - settling at $190 at the close. Compared to platinum, the metal endured a less rapid decline back to $190overnight after rising to $196 in the aftermarket activity. Rhodium fixed at $1,245.
Showing posts with label Standard Bank. Show all posts
Showing posts with label Standard Bank. Show all posts
Monday, January 5, 2009
Wednesday, October 22, 2008
Gold still on the back foot: Standard Bank
“Gold is still on the back foot. With more dollar strength in the pipeline, the yellow metal is putting up little resistance,” said a Standard Bank report on Wednesday.
On MCX, the December contract for gold was trading at (14:54 IST) Rs12,188, down by about 1.5% from its day’s high of Rs12,317 on Wednesday.
MCX Gold December gold prices plunged to Rs12,307 levels and settled at Rs12,377 levels on Tuesday.
“Market is expected to come down and the next supports can be seen at Rs12,200 and then Rs12,050 levels,” said a Karvy Comtrade report on Wednesday.
The report also mentioned that the resistances can be seen at Rs12,400 and then at Rs12,436 levels. “If market sustains below Rs12,436 we may expect gold trading lower. We recommend taking short positions for the day,” it added.
The Standard Bank report also mentioned that after a steady opening just below $800 in Tokyo, gold moved gradually south as the euro weakened. At $790, some stops were triggered, and the metal quickly fell to $785, it said.
“With the dollar still on the rise, gold could remain under pressure today. Primary support is at $757, and a secondary support band at $742 - $720. Resistance is at $794, $810 and $818,” it said.
On MCX, the December contract for gold was trading at (14:54 IST) Rs12,188, down by about 1.5% from its day’s high of Rs12,317 on Wednesday.
MCX Gold December gold prices plunged to Rs12,307 levels and settled at Rs12,377 levels on Tuesday.
“Market is expected to come down and the next supports can be seen at Rs12,200 and then Rs12,050 levels,” said a Karvy Comtrade report on Wednesday.
The report also mentioned that the resistances can be seen at Rs12,400 and then at Rs12,436 levels. “If market sustains below Rs12,436 we may expect gold trading lower. We recommend taking short positions for the day,” it added.
The Standard Bank report also mentioned that after a steady opening just below $800 in Tokyo, gold moved gradually south as the euro weakened. At $790, some stops were triggered, and the metal quickly fell to $785, it said.
“With the dollar still on the rise, gold could remain under pressure today. Primary support is at $757, and a secondary support band at $742 - $720. Resistance is at $794, $810 and $818,” it said.
Tuesday, October 7, 2008
Precious metals shine: Walter de Wet
Yesterday turned into a disaster for equities, crude oil and base metals. However, precious metals showed their mettle. With financial markets in such disarray, gold was the happy beneficiary.
After an uninspired start by equities in Asia yesterday morning, markets deteriorated as the day progressed. The FTSE in London shed 7.85%, followed by the S&P and Dow clocking losses of 3.85% and 3.58% respectively. Equities in Asia are listless again this morning in the wake of yesterday's shocking stock performances in Europe and the US after markets in Asia had closed. However, today should be less volatile trading as financial market investors regroup.
With panic spreading yesterday, the US dollar simply shone. It went from strength to strength, pushing from $1.3705 in Hong Kong to $1.3444 against the euro in New York. Should sentiment steady today, the dollar might give up some of these gains. However, we believe the euro will remain under pressure against the greenback in coming months.
Central bankers around the world, specifically European central bankers, are likely to work ceaselessly to return stability to financial markets. While a surprise interest rate cut is not our base-case scenario, we believe the odds of this have risen in Europe and the US. ECB president, Mr Trichet, will speak later today, followed by Fed Chair Bernanke. Markets will be scrutinizing their comments.
Gold started the day steadily, drifting around $830. But with panic infecting equity markets, investors piled into the yellow metal when European markets opened. Gold then climbed to $875.5 at the PM Fix. What makes this rally so noteworthy is that it happened despite a rampant US dollar. Towards the close in New York, gold had to surrender some gains; it closed at $864. Primary support is at $853, and secondary support at $843 and $822. Resistance is at $875, $888, and $906.
Silver started the day on the back foot, losing 30 cents in Asia, to trade at $11.00. But with gold pushing higher in Europe, silver followed, touching $11.50. In choppy trade, it bounced between $11.15 and $11.40. Support fell away towards the close, and silver closed at $11.04. Primary support is at $10.94 and secondary support at $10.64 - $10.50. Primary resistance is at $11.52, and secondary at $11.80.
Platinum also benefited from financial market uncertainty, tracking gold. It gained from $930 to just around $1,000 in New York. With momentum fading for gold, platinum closed at $973.
Palladium is still holding up well. Although trade has been erratic, it seems to have settled at $195 - $205. It closed at $198.
Rhodium dropped again, fixing at $3,195 in New York.
After an uninspired start by equities in Asia yesterday morning, markets deteriorated as the day progressed. The FTSE in London shed 7.85%, followed by the S&P and Dow clocking losses of 3.85% and 3.58% respectively. Equities in Asia are listless again this morning in the wake of yesterday's shocking stock performances in Europe and the US after markets in Asia had closed. However, today should be less volatile trading as financial market investors regroup.
With panic spreading yesterday, the US dollar simply shone. It went from strength to strength, pushing from $1.3705 in Hong Kong to $1.3444 against the euro in New York. Should sentiment steady today, the dollar might give up some of these gains. However, we believe the euro will remain under pressure against the greenback in coming months.
Central bankers around the world, specifically European central bankers, are likely to work ceaselessly to return stability to financial markets. While a surprise interest rate cut is not our base-case scenario, we believe the odds of this have risen in Europe and the US. ECB president, Mr Trichet, will speak later today, followed by Fed Chair Bernanke. Markets will be scrutinizing their comments.
Gold started the day steadily, drifting around $830. But with panic infecting equity markets, investors piled into the yellow metal when European markets opened. Gold then climbed to $875.5 at the PM Fix. What makes this rally so noteworthy is that it happened despite a rampant US dollar. Towards the close in New York, gold had to surrender some gains; it closed at $864. Primary support is at $853, and secondary support at $843 and $822. Resistance is at $875, $888, and $906.
Silver started the day on the back foot, losing 30 cents in Asia, to trade at $11.00. But with gold pushing higher in Europe, silver followed, touching $11.50. In choppy trade, it bounced between $11.15 and $11.40. Support fell away towards the close, and silver closed at $11.04. Primary support is at $10.94 and secondary support at $10.64 - $10.50. Primary resistance is at $11.52, and secondary at $11.80.
Platinum also benefited from financial market uncertainty, tracking gold. It gained from $930 to just around $1,000 in New York. With momentum fading for gold, platinum closed at $973.
Palladium is still holding up well. Although trade has been erratic, it seems to have settled at $195 - $205. It closed at $198.
Rhodium dropped again, fixing at $3,195 in New York.
Monday, October 6, 2008
Platinum and Palladium hit multi-year lows in September
Platinum Group Metal (PGM) prices continued to fall in the month of September, with platinum and palladium hitting multi-year lows and all three metals posting double-digit month-on-month losses, said a Standard Bank report.
The PGMs traded far below their individual 200-day moving averages, driven lower in part by a stronger dollar and softer commodity prices in general, it said.
The report further added that the deteriorating outlook for the global economy was another contributing factor to the weakness in price. A significant source of downside pressure was attributed to data released during September showing marked declines in auto sales in Europe as well as in several key emerging markets, such as China and India.
The PGMs traded far below their individual 200-day moving averages, driven lower in part by a stronger dollar and softer commodity prices in general, it said.
The report further added that the deteriorating outlook for the global economy was another contributing factor to the weakness in price. A significant source of downside pressure was attributed to data released during September showing marked declines in auto sales in Europe as well as in several key emerging markets, such as China and India.
Silver more volatile than gold
Silver metal remained more volatile than the yellow metal in the month of September.
The overall trends in the two prices were very similar as an uncertain silver market allowed itself to be influenced by gold. Although the market feeling was, in line with the relative fundamentals of the two metals, that silver was the more sluggish of the two with respect to the upside, the Standard Bank report said.
Gold prices buffeted in September: Standard Bank
Gold prices were buffeted during the month of September in the same way as those of any other asset class, but in keeping with gold’s history as an investment vehicle (as well as a natural resource commodity), prices traded in a narrower range than the rest of the precious metals sector, said a report by Standard Bank on Monday.
The report said that between the start of September and the beginning of October, gold gained about 7% in price, while silver and PGM (Platinum group metals) prices fell. A single snapshot does not tell the whole picture, however, and the market itself experienced a variety of phases as problems escalated in the financial system.
One tangible element was the development of vast fund flows into the major Exchange Traded Funds as investors looked to reduce counterparty risk, it said.
Markets still shaky: Standard Bank
US legislators passed the much disputed $700bn rescue bill late on Friday but markets are not convinced of its ability to revive gridlocked credit markets, said a report by Standard Bank.
While US inter- bank lending rates have declined, they’re still extremely high, it said. Despite authorities’ efforts, banks remain suspicious of counterparties’ ability to honour financial obligations.
Scepticism around the rescue plan is also being demonstrated by Asian equities having fallen sharply this morning, the report said. The Nikkei was down more than 4%, followed by the Hang Seng at 3.5%. US equity futures have lost more than 1.5%, possibly signalling another red day in US equity markets.
Global fears continue to translate into high demand for US Treasuries at the expense of other assets. The main beneficiary have been the USD which has gained ground from $1.3850 to as low as $1.3605 against the euro.
“We expect this trend to continue if the Europe and the US track Asian markets later today,” said Standard Bank’s commodity analyst Walter De Wet.
On the data front, Friday’s US non-farm payrolls, which declined by 159,000 which was much more than the estimated forecast decline of 100,000 adds to the list of negative data.
“Faced with a stronger dollar, PGM and silver will see little support. We estimate the average PGM basket price currently at $847/oz. While the market is currently more concerned about demand, persistent low prices would put many mines in financial difficulty,” said Walter.
Walter also mentioned that the yellow metal is still dithering and with investors unwilling to commit to major positions on Friday, gold traded erratically at $845/oz-$825/oz.
After finding some support early in Asia, which pushed gold from $830/oz to $845/oz, gold lost its direction as the dollar drifted around $1.383. A series of sharp spikes followed when US markets opened, but gold remained stuck at $825/oz-$845/oz. It closed at $828.5/oz on Friday, and held up well in the aftermarket after the rescue plan was passed, reflecting the lingering concerns in financial markets, said the report.
“Primary support is at $821/oz, and secondary support at $807/oz and $803/oz. Resistance is at $848/oz, $861/oz, and $888/oz,” said Walter.
The report mentioned that silver initially found solid support in Asia as it gained $0.65, to trade at $11.40/oz, before it stabilized in Europe. Renewed buying support in New York saw the metal shoot to $11.70/oz, just to subside again when gold lost steam. Silver ended the week at a bid of $11.25/oz.
“Primary support is at $11.00/oz and secondary support at $10.88/oz-$10.70/oz. Primary resistance is at $11.65/oz, and secondary at $12.00/oz,’ said Walter.
Platinum remains under pressure; on Friday, trade was choppy. The metal failed to break above $1,000/oz, bouncing between $950/oz and $980/oz. With the stronger dollar, platinum could remain under pressure today. It closed at $955/oz on Friday.
Palladium is holding up well despite platinum’s move lower. Although the metal dropped to $195/oz on Friday, it managed to claw its way back in New York and closed at $198/oz. Rhodium lost $60/oz, to fix at $3,210/oz in New York, it said.
While US inter- bank lending rates have declined, they’re still extremely high, it said. Despite authorities’ efforts, banks remain suspicious of counterparties’ ability to honour financial obligations.
Scepticism around the rescue plan is also being demonstrated by Asian equities having fallen sharply this morning, the report said. The Nikkei was down more than 4%, followed by the Hang Seng at 3.5%. US equity futures have lost more than 1.5%, possibly signalling another red day in US equity markets.
Global fears continue to translate into high demand for US Treasuries at the expense of other assets. The main beneficiary have been the USD which has gained ground from $1.3850 to as low as $1.3605 against the euro.
“We expect this trend to continue if the Europe and the US track Asian markets later today,” said Standard Bank’s commodity analyst Walter De Wet.
On the data front, Friday’s US non-farm payrolls, which declined by 159,000 which was much more than the estimated forecast decline of 100,000 adds to the list of negative data.
“Faced with a stronger dollar, PGM and silver will see little support. We estimate the average PGM basket price currently at $847/oz. While the market is currently more concerned about demand, persistent low prices would put many mines in financial difficulty,” said Walter.
Walter also mentioned that the yellow metal is still dithering and with investors unwilling to commit to major positions on Friday, gold traded erratically at $845/oz-$825/oz.
After finding some support early in Asia, which pushed gold from $830/oz to $845/oz, gold lost its direction as the dollar drifted around $1.383. A series of sharp spikes followed when US markets opened, but gold remained stuck at $825/oz-$845/oz. It closed at $828.5/oz on Friday, and held up well in the aftermarket after the rescue plan was passed, reflecting the lingering concerns in financial markets, said the report.
“Primary support is at $821/oz, and secondary support at $807/oz and $803/oz. Resistance is at $848/oz, $861/oz, and $888/oz,” said Walter.
The report mentioned that silver initially found solid support in Asia as it gained $0.65, to trade at $11.40/oz, before it stabilized in Europe. Renewed buying support in New York saw the metal shoot to $11.70/oz, just to subside again when gold lost steam. Silver ended the week at a bid of $11.25/oz.
“Primary support is at $11.00/oz and secondary support at $10.88/oz-$10.70/oz. Primary resistance is at $11.65/oz, and secondary at $12.00/oz,’ said Walter.
Platinum remains under pressure; on Friday, trade was choppy. The metal failed to break above $1,000/oz, bouncing between $950/oz and $980/oz. With the stronger dollar, platinum could remain under pressure today. It closed at $955/oz on Friday.
Palladium is holding up well despite platinum’s move lower. Although the metal dropped to $195/oz on Friday, it managed to claw its way back in New York and closed at $198/oz. Rhodium lost $60/oz, to fix at $3,210/oz in New York, it said.
Friday, October 3, 2008
Commodity prices weaken due to global slowdown fears
Fears of slower international economic growth coupled with a sharp appreciation of the USD against the EUR combined to drag commodity prices (USD terms) lower, said a report by Commonwealth Bank of Australia on Friday.
It also mentioned that the recent US economic data has been soft, with data released earlier this week showing that the US ISM manufacturing index declined in September, while US auto sales had been weak in September.
Moreover, commodity markets are increasingly concerned that the post-Olympics bounce in Chinese economic activity has been tepid.
The oil price fell back in response to the firmer USD and worries about the implications of weaker international economic growth for oil demand. NYMEX light sweet crude (November contract) touched $94/barrel. The gold price (spot) also slipped sharply, with selling related to the firmer USD and lower oil prices outweighing safe-haven related demand, it said.
“Markets are nervous, erratic and unpredictable, and investors are risk-averse. And so, commodities sold off relentlessly, driving prices down. Precious metals were hard hit, with silver taking the brunt, sacrificing 12.85%. Platinum lost 5.5%, palladium 4.3%, and gold 4.5%,” said a Standard Bank analyst Walter de Wet in a report.
Although platinum came under early selling pressure due to worse-than-expected US auto sales, precious metals were initially stable, the Standard Bank report said. However, the decision by the ECB not to cut interest rates, combined with a bearish statement on the Eurozone, triggered broad asset liquidation. The dollar then appreciated rapidly against most currencies. It went from $1.39 to a low of $1.3748 against the euro. As of now, it remains well below $1.39, it said.
“We foresee more disorder for markets. If the US House of Representatives passes the financial rescue package tonight, it would bring some relief, but not enough to restore confidence. Credit markets still have too much asymmetric information, which is inhibiting risk appetite. Against the backdrop of the slowdown in real economic activity globally, commodities will stay under pressure. These conditions would favour the US dollar and, because of little liquidity, gold could battle to rise much higher despite credit risk being high,” Walter said.
Analysts and traders are keeping an eye on the US non-farm payrolls due for release tonight. Markets expect a decline of 105K jobs. Anything more could see more money flee from commodities, the report said.
The Standard Bank report also mentioned that the yellow metal stayed on the back foot. Although it traded steadily lower in Asia and Europe, the weak euro dragged it down from around $870/oz to $865/oz. The major sell-off started just before the PM fix, and gold plunged to $830/oz as the US dollar strengthened. It closed at $842.50/oz. Primary support for gold is at $830/oz, and secondary at $820/oz and $803/oz. Resistance is at $864/oz, $892/oz, and $900/oz.
Morning trade was orderly, with the silver metal tracking gold, but the sell-off after gold's drop was merciless and Silver took a beating. Just before New York opened, silver slid to $11.80/oz. After failing to settle, it shed another 50c in US trade, closing at $11.05/oz. Primary support is at $11/oz and secondary at $10.30/oz-$10.25/oz. Primary resistance is at $12/oz, and secondary at $12.18/oz.
While Platinum sentiment remains negative the bearish economic data, scarce liquidity and the strong dollar are intimidating it. Platinum dropped early in Europe, from $1,040/oz to $980/oz. It then spent the day bouncing, and closed at $973/oz.
Palladium was pushed down all the way from $213/oz in Asia to $203/oz in Europe to $200/oz in the US, and closed at $199/oz. $200/oz is providing some support. Meanwhile Rhodium dropped more than $500/oz on Thursday, to $3,270/oz in New York.
It also mentioned that the recent US economic data has been soft, with data released earlier this week showing that the US ISM manufacturing index declined in September, while US auto sales had been weak in September.
Moreover, commodity markets are increasingly concerned that the post-Olympics bounce in Chinese economic activity has been tepid.
The oil price fell back in response to the firmer USD and worries about the implications of weaker international economic growth for oil demand. NYMEX light sweet crude (November contract) touched $94/barrel. The gold price (spot) also slipped sharply, with selling related to the firmer USD and lower oil prices outweighing safe-haven related demand, it said.
“Markets are nervous, erratic and unpredictable, and investors are risk-averse. And so, commodities sold off relentlessly, driving prices down. Precious metals were hard hit, with silver taking the brunt, sacrificing 12.85%. Platinum lost 5.5%, palladium 4.3%, and gold 4.5%,” said a Standard Bank analyst Walter de Wet in a report.
Although platinum came under early selling pressure due to worse-than-expected US auto sales, precious metals were initially stable, the Standard Bank report said. However, the decision by the ECB not to cut interest rates, combined with a bearish statement on the Eurozone, triggered broad asset liquidation. The dollar then appreciated rapidly against most currencies. It went from $1.39 to a low of $1.3748 against the euro. As of now, it remains well below $1.39, it said.
“We foresee more disorder for markets. If the US House of Representatives passes the financial rescue package tonight, it would bring some relief, but not enough to restore confidence. Credit markets still have too much asymmetric information, which is inhibiting risk appetite. Against the backdrop of the slowdown in real economic activity globally, commodities will stay under pressure. These conditions would favour the US dollar and, because of little liquidity, gold could battle to rise much higher despite credit risk being high,” Walter said.
Analysts and traders are keeping an eye on the US non-farm payrolls due for release tonight. Markets expect a decline of 105K jobs. Anything more could see more money flee from commodities, the report said.
The Standard Bank report also mentioned that the yellow metal stayed on the back foot. Although it traded steadily lower in Asia and Europe, the weak euro dragged it down from around $870/oz to $865/oz. The major sell-off started just before the PM fix, and gold plunged to $830/oz as the US dollar strengthened. It closed at $842.50/oz. Primary support for gold is at $830/oz, and secondary at $820/oz and $803/oz. Resistance is at $864/oz, $892/oz, and $900/oz.
Morning trade was orderly, with the silver metal tracking gold, but the sell-off after gold's drop was merciless and Silver took a beating. Just before New York opened, silver slid to $11.80/oz. After failing to settle, it shed another 50c in US trade, closing at $11.05/oz. Primary support is at $11/oz and secondary at $10.30/oz-$10.25/oz. Primary resistance is at $12/oz, and secondary at $12.18/oz.
While Platinum sentiment remains negative the bearish economic data, scarce liquidity and the strong dollar are intimidating it. Platinum dropped early in Europe, from $1,040/oz to $980/oz. It then spent the day bouncing, and closed at $973/oz.
Palladium was pushed down all the way from $213/oz in Asia to $203/oz in Europe to $200/oz in the US, and closed at $199/oz. $200/oz is providing some support. Meanwhile Rhodium dropped more than $500/oz on Thursday, to $3,270/oz in New York.
Thursday, October 2, 2008
Bear trend prevails for Palladium:Standard Bank
The short-term bear trend prevails for the precious metal Palladium said an Australia based, Standard Bank report on Wednesday. The market continues recording lower lows and lower corrective highs and, with this in mind, a bearish view is expressed below $256, said the report.
Palladium is likely to encounter support at $190, prompting a minor recovery. Once a break below $190 occurs, the Standard Bank analysts expect the trend to recommence to $166-fulfilling extended objectives off the $590 high.
The report also mentioned that the technical indicators have already entered the oversold territory, but continued weakness through $166 exposes the market towards $140.
Palladium is likely to encounter support at $190, prompting a minor recovery. Once a break below $190 occurs, the Standard Bank analysts expect the trend to recommence to $166-fulfilling extended objectives off the $590 high.
The report also mentioned that the technical indicators have already entered the oversold territory, but continued weakness through $166 exposes the market towards $140.
"We are not forecasting a break below $140, and therefore expect palladium to establish a support base between $166 and $140, and enter a period of sustained corrective strength. In the event of a break below $140, the next support point is situated at $114-the 1996 low. Resistance between $302 to $305 is regarded as a pivotal area," said the Standard Bank report.
A break higher will indicate a near-term trend reversal, turning the outlook positive, the report said.
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